Systems For Change: Nuclear Power vs. Energy Efficiency + Renewables?

Systems for Change:
Nuclear Power vs. Energy

Efficiency + Renewables?
“We know the country that harnesses the power of clean, renewable energy will lead
the 21st century.”
President Barack Obama, State of the Union Address,
February 2010
Hypothesis
Continued investment in nuclear power, in particular new nuclear power plant projects, constitutes a
significant barrier for the necessary shift toward a sustainable and intelligent energy-services economy
based on energy efficiency and renewable energy sources.
By Antony Froggatt with Mycle Schneider
Paper prepared for the Heinrich Böll Foundation, March 2010
Heinrich-Böll-Stiftung Schumannstraße 8 10117 Berlin

Die grüne politische Stiftung Telefon 030.285 34-0 Fax 030.285 34-109 www.boell.de
Systems for Change

Contents
Introduction ............................................................................................................................................4
Overview and Trends ..............................................................................................................................7
Energy demand and the impact of a carbon‐ and resource‐constrained world.................................7
Transforming the energy‐supply options............................................................................................8
Historic and forecasted development of renewables.....................................................................9
Historic and envisaged development of nuclear power ...............................................................14
Comparison of nuclear to renewables..........................................................................................16
Systemic Issues .....................................................................................................................................18
The French centralized system .........................................................................................................18
The German approach: Nuclear phase‐out and renewables expansion ..........................................19
Spanish renewables hitting the current ceiling?...............................................................................20
A new approach ................................................................................................................................21
The Timing of Investment ..................................................................................................................... 23
Imperative of rapid climate change action .......................................................................................23
Lead times for scaling up new technologies, experiences and expectations ...................................23
Nuclear power...............................................................................................................................23
Renewables ...................................................................................................................................27
Opportunity Costs .................................................................................................................................30
Research and development ..............................................................................................................32
Investment costs ...............................................................................................................................33
Infrastructure and grids ....................................................................................................................36
Market mechanisms..........................................................................................................................38
Conclusions ...........................................................................................................................................43

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Figures and Tables
Figure 1: Growth in Global Energy Demand ...........................................................................................9
Figure 2: Global Growth of Renewable Energy in the Power Sector ....................................................10
Figure 3: New Financial Investment in Clean Energy by Sector: 2004‐2009 (US$bn) ..........................10
Figure 4: Global Electricity and Hydropower Production (TWh) ..........................................................12
Figure 5: Accumulative Global Wind Power Capacity (MW) ................................................................13
Figure 6: Installed Capacity of Wind Power Plants in 2008 (MW) ........................................................13
Figure 7: World Installed Concentrating Solar Thermal Power Capacity 1980‐2007 (MW) .................14
Figure 8: World Annual Solar Cell Production 1975‐2007 (MW)..........................................................14
Figure 9: World Nuclear Reactors and Capacity 1954‐2010 (GW)........................................................16
Figure 10: Net Additions to Global Electricity Grid from New Renewables and Nuclear 1998‐2010 (in
GW) .......................................................................................................................................................17
Figure 11: Electricity Production from Non‐Fossil Fuel Sources ...........................................................17
Figure 12: Investment Cost Evolution (“Learning Curve”) of US Nuclear Power Plants .......................26
Figure 13: Investment Cost Evolution (“Learning Curve”) of French Nuclear Power Plants ................26
Figure 14: Technology Learning Curves ................................................................................................28
Figure 15: Changing Investment in Low‐Carbon Energy Sectors ..........................................................31
Figure 16: National Research and Development Budgets in OECD Countries (US$mil) .......................32
Figure 17: Technological Breakdown of OECD Energy Research and Development Budgets (1974‐
2008) .....................................................................................................................................................33
Figure 18: Estimated Carbon Abatement Costs in the UK in 2020 (£/tC).............................................36

Table 1: Construction Time of Nuclear Power Plants Worldwide ........................................................24
Table 2: Electricity Fuel Source Cost Projections in 2020 .....................................................................28
Table 3: Ranking of Renewable, Nuclear and Coal Technologies .........................................................42

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Introduction
US President Obama’s speech of 16 February 2010 on energy in Maryland1 sets the tone. The
possible future, he says, is “a future in which renewable electricity is fueling plug‐in hybrid cars and
energy‐efficient homes and businesses” and “in which we’re exporting home‐grown energy
technology instead of importing foreign oil.” And in order to get there, he says, more is needed:
We'll need to make continued investments in advanced biofuels and clean coal technologies,
even as we build greater capacity in renewables like wind and solar. And we're going to have
to build a new generation of safe, clean nuclear power plants in America.
Efficiency, renewables and nuclear power. French President Sarkozy agrees with his US counterpart
and on 9 June 2009 he stated: “We will take a turn on renewable energies that is as significant as the
one General de Gaulle took on nuclear in the 1960s. It is not one or the other. It is one and the
other.”2 Sarkozy announced that for each euro spent on nuclear, a euro will be spent on renewable
energy. He also clarified the political agenda on the issue. The investment parity is meant to
“preserve a consensus on nuclear and get those that are opposed to nuclear to tolerate it.”3 What
has been known for 65 years as the French Atomic Energy Commission is soon to be renamed
Atomic and Alternative Energy Commission (Commissariat à l’Energie Atomique et aux Energies
Alternatives).
Nuclear power as a “bridging technology”? Germany’s conservative coalition government has
announced that it plans to extend the operation of its remaining 17 nuclear power plants beyond
the deadlines that are defined in the still valid nuclear phase‐out legislation. According to the
coalition agreement between the two government parties, “the lion share” of the additional utility
profits from plant life extension shall be taxed by the government and reinvested in renewable
energies and energy efficiency in particular. The explicit prohibition of nuclear new built shall remain
untouched. Chancellor Angela Merkel’s government and her own party are split when it comes to
the implementation of the agreement. Environment Minister Norbert Röttgen stated that the
challenge is to shift “quasi entirely to renewable energies” and he stresses that he does not know
“anybody in the coalition that says: Nuclear is our technology of the future.”4 Röttgen wants the
nuclear phase‐out to be accomplished by 2030 – about eight years later than the timeframe under
the current legislation, when reactors reach about 40 years in age and renewables are supposed to
cover 40% of the electricity, up from 16% today. The German minister points out that “a lot of
nuclear electricity and a lot of eco‐electricity don’t fit together as economic concepts.”5
Fit or don’t fit together? Germany is likely the most interesting case when it comes to the analysis of
potential complementary or contradictory aspects of nuclear and efficiency+renewables‐based
energy systems. The German Federation of Municipal Enterprises (VKU) – a powerful association of

1 Remarks by the president on Energy in Lanham, Maryland (16 February 2010),
http://www.whitehouse.gov/the‐press‐office/remarks‐president‐energy‐lanham‐maryland
2 Le Monde (9 June 2010); in fact, it was not de Gaulle that launched the first large nuclear power plant
program but Prime Minister Messmer in 1974.
3 Ibid. One should add that the “consensus” on nuclear power was never a public opinion consensus but rather
an agreement by the major political parties.
4 Frankfurter Rundschau (19 February 2010),
http://www.fr‐online.de/in_und_ausland/wirtschaft/debatte_energie_der_zukunft/?em_cnt=2331965&
5 Ibid.
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1,350 companies that covers over half of the country’s end‐users in the electricity and heat sectors –
is concerned about the consequences of the planned delayed phase‐out of nuclear power. VKU’s
executive director, Hans‐Joachim Reck, declared in a press statement:6
The negative implications for competition and for the conversion of the energy system
toward decentralization and renewable energies are entirely blanked out. […] It is
counterproductive to discourage investments of municipal utilities into efficient and future‐
oriented energy generation.
Municipal power plant investments in Germany in the order of €6.5 billion would now have to be
reassessed, and even the economic viability of already implemented projects would be threatened,
VKU added.
Many systemic issues have not been thoroughly investigated yet when it comes to compatibility or
incompatibility of the centralized nuclear approach versus the decentralized efficiency+renewables
strategy. What are the consequences for grid development or how do choices on grid characteristics
influence power‐generation investment strategies? To what extent is the unit size co‐responsible for
structural overcapacities and thus a lack of incentives for efficiency? How do government
grants/subsidies stimulate long‐term decision‐making? Will large renewable power plants reproduce
the same system effects as large coal/nuclear plants?
The present report presents the basic situation and raises questions that urgently need to be
addressed. Successful energy policy will have to address the energy service needs of people in a
much more efficient way than has been done in the past, as increased competition for ultimately
finite fossil fuel leads to higher energy prices for all. For too long, energy policies have aimed at
“supply security” of oil, gas and kilowatt‐hours, rather than general access to affordable, reliable and
sustainable services like cooked food, heat and cold; light; communication; mobility; and motor
torque.
The outcome is well known. Even in industrialized countries with established nuclear power
programs like the United States, France and the United Kingdom, fuel poverty has become a severe
problem and is rising rapidly. The acronym EWD has been created: It stands for Excess Winter
Deaths. A European project7 has shown that the number of people that die during the winter
because they cannot afford to heat their homes appropriately has become statistically highly
significant. EWDs vary from 10% in Paris to 30% in Glasgow. In the United Kingdom, it is estimated
that 15,000 people die in winter in addition to the normal mortality rate due to consequences of fuel
poverty. In nuclear France, close to eight million households, about 28% of the total, spend over 10%
of the budget on energy (including transport). Since 2005 about three million French families have
been eligible for the Tariff for Primary Necessities, another recent invention that provides a
subsidized lower tariff for low‐income families.
It is obvious that nuclear power did not lead to broad‐scale and just access to energy services in the
countries that opted for nuclear energy. But is a nuclear strategy actually counterproductive for the
development of a clean‐energy service future based on efficiency+renewables? There is strong

6 VKU, press release 2/10 (19 January 2010).
7 European fuel Poverty and Energy Efficiency, see http://www.precarite‐energetique.org/
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evidence that this is the case. As Time magazine commented on President Obama’s nuclear loan‐
guarantee decision: “Eventually, extravagant government largesse might create a nuclear rebirth of
sorts – but it might end up strangling better solutions in their cribs or prevent them from ever being
born.”8
Nuclear vs. Renewable
Amory Lovins:9 “But nuclear power is about the least effective method: It does save carbon, but
about 2 to 20 times less per dollar and 20 to 40 times less per year than buying its winning
competitors.”
10
Bill Keepin and Gregory Kats: Improving electrical efficiency is nearly seven times more cost‐
effective than nuclear power for abating CO2 emissions, in the United States.
Environment California:11 “Per dollar spent over the lifetime of the technology, energy efficiency and
biomass co‐firing are five times more effective at preventing carbon dioxide pollution and combined
heat and power is greater than three times more effective” than nuclear power.
Warwick Business School:12 The undermining of other technologies means that nuclear power is not
complementary to other low‐carbon technologies. This refutes the argument that all low‐carbon
technologies should, and are able to, be harnessed together so that they can harmoniously work
together to reducing carbon dioxide emissions. On the contrary, the government has to make a
choice between a nuclear future and one dominated by renewable generation and the more
efficient use of energy.

8 Time magazine (18 February 2010).
9 Amory B. Lovins, “Proliferation, Oil, And Climate: Solving For Pattern”; Lovins’ expanded version of essay
“Proliferation, Climate, And Oil: Solving For Pattern,” Foreign Policy (17 January 2010).
10 B. Keepin and G. Kats, "Greenhouse Warning. Comparative Analysis of Nuclear and Efficient Abatement
Strategies," Energy Policy 15:6 (December 1988): pp. S38‐S61.
11 Travis Madsen, Tony Dutzik, Bernadette Del Chiario, and Rob Sargent, Environment California: Generating
Failure: How Building Nuclear Power Plants Would Set America Back in the Race Against Global Warming
(November 2009).
12
Catherine Mitchell and Bridget Woodman, New Nuclear Power: Implications for a Sustainable Energy System
(Warwick Business School: March 2006).
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Overview and Trends
Energy demand and the impact of a carbon and resourceconstrained
world
The last few years have seen unprecedented changes in the energy sector. The markets – in
particular for oil but with a knock‐on effect to the other energy sources – have been extremely
volatile. By mid 2008, the price of oil was close to $150 per barrel – an eightfold increase from a
decade earlier. However, within a few months, the high prices had accelerated global economic
problems, resulting in a price collapse to around $30 per barrel. In all energy sectors, the global
recession has depressed energy consumption and, remarkably, 2009 is expected to be the first year
since the end of World War Two that global electricity consumption has fallen.
However, globally, traditional energy “forecasts” anticipate rapid increases in energy demand,
driven primarily by the need to fuel the growing economies in Asia, and particularly China, and to a
lesser extent India. The International Energy Agency (IEA) assumes in its Reference Scenario of the
2009 World Energy Assessment that global energy demand will increase by 40% by 2030. Within this
scenario, Chinese energy consumption effectively doubles between 2007 and 2030, while in the
European Union demand increases by only 1%, and in the United States by less than 5%. The
Reference Scenario adopted by the IEA is not a sustainable one, but is an extension of current
national policies. There is no doubt that development along this pathway would lead to unparalleled
and catastrophic changes in the atmosphere, with the IEA suggesting that the “the CO2
concentration implied by the Reference Scenario would result in the global average rising by up to 6
degrees Celsius.”13
The climate impact is not the only – or even necessarily the most pressing – problem associated with
the Reference Scenario. The question of the midterm availability of suitable resources and the
associated impact on the physical availability and prices for consumers is pressing, especially for
liquid fuels. In recent years, the IEA has decreased the 2030 estimates for oil demand in its
Reference Scenario. In the 2004 World Energy Outlook, global oil demand was expected to grow at
an annual rate of 1.6% per year, reaching 121 million barrels per day (mb/day) in 2030, compared to
current annual growth‐rate scenarios of 1% per year, leading to 105 mb/day in 2030. The IEA has in
particular altered its assumptions for consumption of oil in OECD countries with a 17‐mb/day
difference between the 2004 and 2009 scenarios. The lower oil demand still, however, leads to
serious questions of resource availability due to a combination of overall increase in demand (as
current demand is 76 mb/day). An assessment by the UK Energy Research Centre in 2009 estimated
that the average rate of decline from fields that are past their peak of production is at least
6.5%/year globally, while the corresponding rate of decline from all currently‐producing fields is at
least 4%/year. To maintain the current levels of output, 3 mb/day of new capacity would be required
each year, or the equivalent of the production of Saudi Arabia every three years.14
Therefore, from a security of supply and climate security system perspective, the current energy
system and the policies that shape it are highly unsustainable. Regardless of the type of energy

13
IEA, World Energy Outlook 2009, p. 44.
14
UKERC, Global Oil Depletion, An Assessment of the Evidence for a Near‐term Peak in Global Oil Production
(August 2009).
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system envisaged, new investment will be required to meet predicted increases in demand for the
exploitation of new energy sources and to replace existing infrastructure and facilities. The IEA
estimated that the investment cost for its Reference Scenario will be in the order of $26 trillion
between 2008 and 2030, or an annual requirement of $1.1 trillion – 1.4% of global GDP per year.
Over half of this cost will be for the power sector. Importantly, the IEA has also undertaken a
scenario in which emissions from the energy sector are reduced so as to fall within the 2 degree
target. The investment costs associated with this “450 Scenario” are significantly higher than for the
Reference case and would require an additional $10.5 trillion. However, the IEA also calculates that
the 450 Scenario will result in a reduced energy cost of around $8.6 trillion by 2030 and a total
savings over the lifetime of the structures of $17 trillion.
It is clear that a new direction is needed to create a sustainable and secure energy sector and that
the current policies and market trends in place around the world must radically and rapidly change.
In the long term, a low‐carbon and environmentally secure energy sector is possible and will be
cheaper than attempting to continue business as usual. However, just switching from a highly
polluting to a less‐polluting energy source will not result in a sustainable energy sector. Instead,
there also needs to be systemic change that places far greater emphasis not only on the efficiency of
the system as it relates to energy use, but also on its production, transformation and transmission,
which are often overlooked.
Transforming the energysupply options
Global energy consumption has increased as a result of the increase in population and per capita
energy use. The figure below shows the extent to which global energy consumption has increased
over the last two centuries, with a doubling between 1800 and 1900, and an eightfold increase in the
last 100 years. As noted by the IEA and others, this trend is expected to continue as less‐developed
countries seek to increase the standard of living of their populations and enable them to have even
basic energy services. Currently, around a quarter of the world’s population lack access to electricity‐
based services and there is a fivefold per capita difference between energy consumption in OECD
and developing countries. The figure also shows the extent to which commercial fossil fuels – those
from coal, gas and oil – have contributed to this gap. While the global annual population growth rate
has slowed in recent years to 1.3%, the UN’s medium fertility scenario envisages that the population
will not peak until after 2200, when it will have reached 10 billion, up from today’s 6 billion level.15

15 UN, Six Billion (2004), http://www.un.org/esa/population/publications/sixbillion/sixbilpart1.pdf
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Figure 1: Growth in Global Energy Demand

16
Source: Arnulf Grübler, 2008.
Historic and forecasted development of renewables
Renewable energy was for centuries the main energy source for the human race, initially through
the burning of biomass – particularly wood – but then through the exploitation of water and wind
power. However, over the last centuries the reliance on renewable energy has declined as the ability
to harness energy from fossil fuels developed. The use of fossil fuels, in particular in the form of coal,
oil and then gas, has enabled energy to be released on an unparalleled scaled. This is because they
are relatively energy‐dense and therefore, despite the energy consumed in their processing and
transportation, the consumer can obtain large quantities of usable energy.
However, in the last few years this trend has started to reverse in certain regions and sectors. Most
notable has been the EU power sector. In Europe €13 billion of wind investment was made in 2009,
which led to wind power installations accounting for 39% of new installations – the second
consecutive year in which more wind power was installed than any other generating technology.
Furthermore, renewable power installations in general accounted for 61% of new installations in
2009. The EU power sector continues its move away from coal, fuel oil and nuclear, with each
technology continuing to decommission more than it installs.17
Figure 2 shows how a similar trend is developing within the global power sector. In 2008, nearly one‐
quarter of all investment in new generation technology was in renewable energy, not including large
hydro – a fourfold increase in the contribution since 2003.

16 Arnulf Grubler, “Energy transitions,” in Encyclopaedia of Earth, ed. Cutler J. Cleveland (Washington, DC:
Environmental Information Coalition, National Council for Science and the Environment, 2008).
17 EWEA, More Wind Power Capacity Installed Last Year in the EU Than Any Other Power Technology,
European Wind Energy Association (February 2010).
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Figure 2: Global Growth of Renewable Energy in the Power Sector

(excluding Large Hydro)

Source: UNEP et al., Global Trends in Sustainable Energy Investment, 2009.
As can be seen in figure 3, this investment falls across a range of renewable technologies. However,
there are two – solar and wind power – that dominate the sector, resulting from investment in 2008
of around $80 billion between them.
Figure 3: New Financial Investment in Clean Energy by Sector: 2004-2009

(US$bn)
$122bn
$118bn
$112bn
Geothermal
Other low carbon tech/services

$73bn
Efficiency
Marine & small hydro
$38bn Biomass & Waste
Biofuels
$18bn
Solar
Wind
2004 2005 2006 2007 2008 2009
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Note: Financial sector investment only (i.e., excludes corporate and government R&D and small distribute
capacity). Not adjusted for reinvested equity. Total values include estimates for undisclosed deals. Source: Bloomberg New Energy Finance.
Hydropower
The development and widespread use of electricity has resulted in considerable use of hydropower,
which in 2007 produced around 3,100 terawatt hours (TWh) of electricity per year (an equivalent of
265 million tons of oil equivalent – mtoe). As a contribution to the global energy mix, this equates to
around 15% of electricity. The installed capacity of hydropower is 923 gigawatts (GW) and is by far
the largest of the renewable sources. However, there are significant differences in the
environmental impacts and acceptability of hydropower. This particularly relates to the size of
hydropower facilities.
Despite having many of the most accessible and economical large hydro sites in operation,
particularly in North America and Europe, there has not been a significant increase in the use of
hydropower. In fact since 2000 the global output of hydropower has increased by only 20%, which is
below the rate of increase in electricity consumption as a whole. Consequently, hydropower’s
contribution to global electricity consumption has declined from 17% in 2000 to little over 15% in
2008, according to the BP Statistical Review of World Energy. Under the IEA’s Reference Scenario,
the electricity production from hydropower is expected to increase by around 50%, although its
relative contribution will fall to nearly 14%. Even in the 450 Scenario, it is only expected to provide
around 19% of electricity by 2030.
Scenarios by other organizations also indicate that there will be no significant increase in output
from the hydro sector. Greenpeace’s Energy Revolution scenario assumes even less installed
capacity from hydropower than the IEA’s Reference Scenario.18 However, assessments do show that
the potential from hydropower is potentially much larger. The World Energy Assessment estimates
that the economic potential is approximately 8,100 TWh, the technical potential some 14,000 TWh
and the gross theoretical potential around 40,000 TWh.19 Reaching many of these levels would
potentially bring large and, to many, unacceptable environmental and social consequences, and
therefore will not be undertaken. However, some expansion could be achieved through smaller run
of the river power plants or increased efficiency of existing facilities.
Figure 4 shows the relative importance of hydropower in the global electricity supply mix over time.
Importantly, despite its relatively good economic performance, the expansion of hydro‐generated
electricity has not kept pace with the sector as a whole and its relative contribution continues to fall.

18 Greenpeace, Energy Revolution, Global Energy Scenario (DLR, Institute of Technical Thermodynamics,
Department of Systems Analysis and Technology Assessment, European Renewable Energy Council, and
Greenpeace International, 2008).
19 WEA, “Chapter 4: Energy Resources,” in: World Energy Assessment: Energy and the Challenge of
Sustainability (United Nations Development Programme, 2004).
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Figure 4: Global Electricity and Hydropower Production (TWh)

Source: BP, 2009.20
Wind power
As noted, the commercial use of wind has increased rapidly in a number of countries in recent years.
The figures below show both the increase in installed capacity over the last decade and also the
breakdown of installed capacity across the globe. Over the past decade, the annual global growth
rate has reached 30%. This trend is expected to increase, in particular with measures to improve
energy security and climate security relying on wind power. The Global Wind Energy Council
envisages that there will be an increase in wind energy from the 2008 level of 261 TWh to 680 TWh
in 2012, which in total would contribute to 42% of the Annex 1 commitments under the first
commitment period of the Kyoto Protocol. Furthermore, the GWEC estimates that under a more
ambitious scenario, wind power could provide between 21 and 34% of the required emission
reductions for developed countries, as outlined by the IPCC when calling for a 25 to 40% reduction.
This would require around 1,000 GW of installed capacity by 2020, which is a slowing down of the
current global growth rate.21 However, other scenarios give, in some cases, much lower levels of
installed capacity for wind power in 2020: The IEA suggests around 650 GW in their 450 Scenarios
and Greenpeace around 900 GW.

20 BP, Statistical Review of World Energy (June 2009).
21 GWEC, Wind Power is Crucial for Combating Climate Change (Global Wind Energy Council, December 2009).
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Figure 5: Accumulative Global Wind Power Capacity (MW)
Source: Global Wind Energy Council, 2010.22
Figure 6: Installed Capacity of Wind Power Plants in 2008 (MW)
Source: Global Wind Energy Council, 2010.
Solar power
There are two basic types of solar technologies for electricity production: concentrated solar power,
which concentrates solar heat to create steam and to drive turbines and then create energy in a
more conventional way; and solar photovoltaic (PV), which converts the sun’s energy directly into
electrical current. Solar energy is also used, on a far wider scale, to heat water and buildings – solar
thermal. The development of these technologies has followed quite distinctive pathways. The larger,
more centralized concentrated solar power has experienced more of a “boom and bust” pathway
(figure 7), while figure 8 shows the more steady development of solar PV.

22 GWEC, “Global Installed Wind Power Capacity: 2008/9” (Global Wind Energy Council, February 2010),
http://www.gwec.net/fileadmin/documents/PressReleases/PR_2010/Annex%20stats%20PR%202009.pdf
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Figure 7: World Installed Concentrating Solar Thermal Power Capacity

1980-2007 (MW)
Source: Earth Policy Institute, 2009.
Figure 8: World Annual Solar Cell Production 1975-2007 (MW)
Historic and envisaged development of nuclear power
The first nuclear reactor was connected to a power grid in 1954 in what was then the Soviet Union.
The rise in the numbers of operating units was uninterrupted for 35 years until the end of the 1980s.
By 1989 there were a total of 424 reactors operating in the world. A historic peak was reached in
2002 with 444 units, eight more than the 436 operating reactors as of January 2010. The
International Atomic Energy Agency (IAEA) lists 56 reactors as under construction (as of the end of
February 2010), 13 of which have been listed for over 20 years and almost half of them have
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encountered significant delays.23 In fact, for the first time since the beginning of the commercial use
of nuclear energy, no new unit was connected to the grid in 2008. Since the grid connection in
August 2007 of the Romanian Cernavoda‐2 unit (after 24 years of construction), only two new
reactors (one each in Japan and in India) have started up, while five units were taken off the grid in
2008 and 2009. Total installed capacity has also slightly decreased, in spite of widespread
“uprating.”24
In 2008 the 370 GW of nuclear capacity generated about 2,600 TWh, that is 14% of commercial
electricity or 5.5% of commercial primary energy, or between 2% and 3% of all energy in the world –
all on a downward trend.25
In spite of the real‐term decline in the role of nuclear energy, projections for a massive development
by the IAEA and the OECD’s International Energy Agency have been increasingly optimistic. The IAEA
anticipates 473 GW of nuclear capacity in its “low” scenario and, with admirable precision, 747.5 GW
in its “high” scenario by 2030. The IEA’s World Energy Outlook 2009 has added another 10% to its
projected installed nuclear capacity to reach 475 GW by 2030 in its Reference Scenario. In its 450
Scenario (climate stabilization scenario) the IEA envisages, similar to the IAEA “high” scenario, to
more than double the current nuclear capacity and power generation by 2030. The IEA states:
A nuclear renaissance is possible but cannot occur overnight. Nuclear projects face significant hurdles,
including extended construction periods and related risks, long licensing processes and manpower
shortages, plus long‐standing issues related to waste disposal, proliferation and local opposition. The
financing of new nuclear power plants, especially in liberalised markets, has always been difficult and
the financial crisis seems almost certain to have made it even more so. The huge capital
requirements, combined with risks of cost overruns and regulatory uncertainties, make investors and
lenders very cautious, even when demand growth is robust.26
Neither the IAEA nor the IEA demonstrate how these “significant hurdles” could be overcome in
order to justify these significant expansion projections. In fact, in a recent report, the Basel‐based
think tank Prognos27 suggests that the number of operating reactors is likely to decrease by 29% by
2030 if compared with the spring 2009 level. Prognos estimates that only 35% of the projects
announced by the World Nuclear Association for 2030 will materialize – not enough to compensate
for aging reactors being taken off the grid.

23 For a detailed analysis, see Mycle Schneider, Steve Thomas, Antony Froggatt, and Doug Koplow, The World
Nuclear Industry Status Report 2009, commissioned by the German Environment Ministry (Paris: August 2009),
available in English and German at http://www.bmu.de/english/nuclear_safety/downloads/doc/44832.php
24 Capacity increase at existing facilities by technical means (steam generator replacement, turbine
refurbishment, etc.).
25 We use the term “commercial” here in order to clarify that the energy statistics do not generally take into
account non‐grid connected power or non‐commercial biomass for example that contribute a substantial
share of the energy supply in many parts of the world.
26 IEA, World Energy Outlook 2009, p. 160.
27 Matthias Deutsch et al., Renaissance der Kernenergie, commissioned by the Federal Radiation Protection
Office (BFS) (Berlin/Basel: September 2009).
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Figure 9: World Nuclear Reactors and Capacity 1954-2010 (GW)
©Mycle Schneider Consulting Sources: IAEA‐PRIS, MSC, 2010.
Comparison of nuclear to renewables
Figures 10 and 11 show the net additions to the grid from new renewables (not including large
hydropower) and nuclear and the contributions of all so‐called low‐carbon energy sources to the
global electricity mix. Although at first glance these figures may appear contradictory, they are two
sides of the same narrative. Figure 10 details the net additions to the grid over the global grid over
the last decade. The size of the individual stations, coupled with the closure of reactors, is why the
nuclear trend‐line lacks an overall direction, but it could be summarized to an average net annual
additional capacity of around 2 GW per year, compared to a global installed capacity of 370 GW.
However, this trend has stagnated or decreased since 2005. Over the same period, wind power has
increased its capacity by over 10 GW on average per year, with capacity additions steadily increasing
to reach over 37 GW in 2009.
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Figure 10: Net Additions to Global Electricity Grid from New Renewables and
Nuclear 1990-2010 (in GW)
Source: Amory Lovins, 2010.28
However, it is important to also look at the actual electricity generated by the different non‐fossil
fuel sources, as is mapped out in figure 11. This shows the extent to which, despite the recent
growth in new renewables, their contribution, compared to nuclear power and large hydro, is small.
However, as figure 10 shows this situation will change. The IEA assume that in their 450 Scenario
that by 2030, the use of hydropower will be double the current level of nuclear power, while wind
power will produced an equivalent amount as will other renewable sources29.
Figure 11: Electricity Production from Non-Fossil Fuel Sources


28 Amory Lovins, Personal communication to the author (2010).
29 IEA, World Energy Outlook 2009, table 9.2, p. 324.
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Systemic Issues
“If someone declares publicly that nuclear power would be needed in the baseload because of fluctuating
energy from wind or sun in the grid, he has either not understood how an electricity grid or a nuclear power
plant operates, or he consciously lies to the public. Nuclear energy and renewable energies cannot be
combined.”
Siegmar Gabriel
then Federal Environment Minister of Germany30

The policy decision to develop nuclear power and/or energy efficiency+renewables is far from
limited to the choice of technological options. The decisions are often triggered, or at least heavily
influenced, by pre‐existing political systems, decision‐making processes, market structure and heavy
infrastructure. On the other hand, basic system decisions, like centralized or decentralized power
generation, have a significant impact on the flexibility and competitiveness of the energy
technologies and systems. For example, while there is no doubt that combined heat and power
(CHP) is a much more efficient way to provide heat‐ and electricity‐based energy services than
separate generation, it is difficult for CHP to compete with existing centralized and often oversized
power plants or existing natural gas networks.
In many developing countries, very many of those infrastructural decisions have yet to be made.
Consequently, it is of utmost importance to assess the implications of these basic system choices.
Industrial countries illustrate the outcome of past strategic choices. Unfortunately, while there are
numerous successful local and regional cases, there is no “good” example for a successful national
energy policy that provides affordable, sustainable energy services. All countries have implemented
policies that have serious drawbacks, and major “repair jobs” are necessary in order to address the
defaults.
The French centralized system
France, for example, governed by a very centralized political system, quite naturally has always been
looking for centralized answers to energy‐supply challenges. Nuclear power was a logical choice of
top‐down decision‐making and the result of the total absence of a willingness by the central state to
share political power on energy issues with regional or even local governments. Like a steamroller,
the state‐sponsored nuclear logic wiped out small and medium‐sized industries trying to develop
new and renewable energy sources. In a similar way, efficiency efforts have been often suffocated.
By the mid 1980s, it had become clear that the state utility EDF had massively overbuilt (in the order
of 16 nuclear power plants). Instead of adjusting the equipment planning, the state dismantled most
of the Energy Efficiency Agency and EDF went for two strategic choices: long‐term electricity export
agreements and widespread promotion of electric space and water heating. This strategy has led to
the single most significant barrier for the development of energy efficiency+renewables in France.
Hundreds of thousands of buildings have been built without chimneys, thus without a low‐cost
opportunity to switch to a less wasteful and polluting heat source than electricity. In recent years the
tendency has even increased and around 75% of all new French homes are equipped with electric
space heating. There are cases where new urban heating networks pass by electricity‐heated

30 Deutscher Bundestag, 16. Wahlperiode, 211. Sitzung (Berlin: 19 March 2009).
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buildings without any chance of hooking them up because of lacking chimneys and disproportionate
investment costs.
The other side‐effect of the massive thermal use of electricity – almost half of the residential power
consumption in France – is the spectacular increase of the winter peak load that reaches now three
times the lowest load‐day in summer. The result is a considerable increase in fossil fuel use for
power generation (an increase of about 25% since 1990), the restart of up to 40‐year‐old oil‐fired
power plants and the rapidly increasing import of electricity, in particular coal‐fired power from
Germany. In fact, in January 2010 France was a net importer of electricity – after October 2009 the
second net import month in 27 years.
The energy efficiency+renewables efforts in France have remained severely underdeveloped.
Logically, per capita electricity consumption is significantly higher than the EU average or in a
country like Italy, which phased out nuclear power after the Chernobyl disaster. In 2008 Spain added
more wind power capacity (4,600 MW) than France had installed in total by 2007 (4,060 MW).
The German approach: Nuclear phaseout and renewables expansion
The German case illustrates an entirely different strategy. While nuclear power has provided up to
30% of the electricity, the country has always heavily depended on coal and lignite. In 2000 the
government signed an agreement with the nuclear utilities and in 2002 legislated for the phase‐out
of nuclear power. In parallel, in 2000 feed‐in tariff legislation was passed. It introduced guaranteed
prices for renewable electricity producers and market stimulation programs have been introduced to
foster the penetration of renewable energies in the heat market. The combination of a clear
planning horizon for the phase‐out of nuclear power and strong stimulation for the development of
renewable energies created a phenomenally dynamic environment. Regional energy agencies under
Länder (state) authority were instrumental in engineering the implementation. The total energy
provided by renewable energies has tripled since the end of the 1990s, hundreds of thousands of
jobs have been created and renewable energy technologies have become a top export branch.
However, not everything has gone well. While the generation of renewable electricity, mainly wind,
increased by about 70 TWh – or a factor of five between 1990 and 2007 – total electricity
consumption increased by over 12%, or almost 68 TWh, during the same period. As a result, the CO2
emissions of the German power‐generation sector was identical in 2007 and 1990. That is a
particularly shocking result as the unification of East and West Germany led to a “natural” decrease
of the carbon content and power consumption in the east due to the simple shutdown of outdated
power plants31 and industries.
Energy analysts and environmental organizations have been pointing out this problem for some
time, but neither the previous Grand Coalition nor the new conservative government have been able
to implement even the minimum efficiency requirements under EU legislation. At the same time, the
extension of the operation of German nuclear power plants threatens the restructuring of the

31 The oldest coal‐fired power plant in East Berlin operating in 1989 dated from 1919.
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energy system in the country. A comprehensive analysis by Joachim Nitsch, commissioned by the
German Environment Ministry, concluded in 200832:
In case of the lifetime extension of nuclear energy, the current planning for the construction
of new fossil fuel plants would have to be entirely revised in order not to threaten the 30%
target for renewable energy for 2020. The CHP target could not be reached. The necessary
structural change of the power supply towards significantly increased electricity efficiency, a
significantly higher share of CHP and a high expansion dynamic for renewable energy would
be fundamentally put into question. Thus the energy system would be hardly in a position to
fulfil the climate protection target of an 80% CO2 emission reduction until 2050.
The significant expansion of renewable energies in the power sector does not necessitate additional,
large baseload capacities that operate all year round with high load factors, but rather flexible,
middle‐load plants that can adapt to various types of intermittent power plants.33 “The lifetime
extension of nuclear power plants would leave electricity quantities in the market that otherwise
would be successively replaced by combined heat and power,” stresses the Wuppertal Institute.34 At
the same time, continued operation of nuclear plants would also hinder the extension of urban
heating systems.
Direct competition between renewable electricity and nuclear power leads more and more to
absurd market situations. In Germany the injection of renewable electricity has a legal priority over
nuclear power. But in October 2008, for example, wind energy generation was so high that some of
it had to be “sold” for “negative” prices on the power market because nuclear power plant output
could not be reduced quickly enough. This situation appeared in spite of the fact that 8 GW of
nuclear capacity was off‐line for maintenance.35 In fact, the phase‐out strategy is perfectly
complementary to the introduction of a highly flexible system based on the intelligent combination
of distributed energy sources.
Spanish renewables hitting the current ceiling?
In Spain, in the early morning of 24 February 2010, the transmission system operator Red Eléctrica
(REE) ordered 800 MW of wind power to stop generating electricity for several hours. This was
because at 1:30 am, wind power was delivering 11,961 MW (44.5% of the 26,674 MW demanded at
that time). However, after an intervention from REE, the wind power output was lowered to 10,852
MW. Wind generation remained below the amount it could have delivered until 6:30 am, when
demand started to increase. However, during the period of decreased wind output, nuclear
generation remained unchanged.

32 Joachim Nitsch, “Leitstudie 2008 ‐ Weiterentwicklung der Ausbaustrategie Erneuerbare Energien vor dem
Hintergrund der aktuellen Klimaschutzziele Deutschlands und Europas”, commissioned by the Federal Ministry
for the Environment, Nature Conservation and Nuclear Safety (October 2008).
33 Note that in fact all power plants are more or less intermittent, including nuclear plants that are not only
down for several weeks per year for refueling but also many of which that have experienced extensive repair
or upgrading outages exceeding one year.
34 Manfred Fischedick et al., “Hindernis Atomkraft – Die Auswirkungen einer Laufzeitverlängerung der
Atomkraftwerke auf erneuerbare Energien”, commissioned by the Federal Ministry for the Environment,
Nature Conservation and Nuclear Safety (Wuppertal Institut, April 2009).
35 Ibid.
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A new approach
One of the most significant system issues is the effect of the insistence on centralized power plants –
whether extended operation or new built – on innovation. This is not only relevant for technological
aspects of power and heat generation but in particular for innovative linkages of decentralized
energy use and load management in virtual power plants. Virtual power plants – the clustering and
central management of decentralized (distributed) generation units like small‐scale renewables and
CHP – are one of the most promising concepts of the electricity future.
A further expansion of this approach is the inclusion of decentralized storage capacities, like car
batteries or renewable energy‐system backup storage. This is literally the opposite of the nuclear
power vision. Power consumers use a power switch that triggers the generation and use of energy
according to optimized grid conditions (demand/supply balance). In order to allow for this
development, the grids will have to be adapted significantly. The European Regulators Group for
Electricity and Gas has stated in a recent public consultation paper36:
Future electricity networks will be required to connect generators of many different
technologies and sizes, at all voltage levels, some of them highly controllable and others
with their output strongly dependent on the instantaneous physical availability of their
renewable primary energy resource (e.g., wind generation). […] Significantly more system
monitoring and intelligent control will need to be introduced to securely meet the demand
for energy with the optimum level of generation and network capacity. This will be achieved
by the evolution of electricity networks – in short smart grids.
The key difference to traditional power transport and distribution systems is the adaptation of a
sophisticated communications network to the electricity network. A significant challenge will be the
integration of these communication systems at medium‐ and low‐voltage levels and the organization
of their synergies with smart metering on the consumer side. In order to make this work, not only do
new electronic systems have to be deployed but also regulation has to be adapted. And the faster
one wishes for the introduction of smarter grids, the more that regulators are requested “to find
ways of encouraging an adequate level and scope of more radical innovations while providing an
appropriate degree of protection of customer interests and economically‐effective development of
the network.”37
Non‐nuclear Italy was a precursor in smart metering. Already in 2006 the regulators announced the
mandatory installation of smart meters for all consumers by the end of 2011. However, Sweden
implemented the technology faster and reached 100% coverage by July 2009. Now the country is
helping neighboring Denmark, Finland and Norway to speed up installation.38 Nuclear France will
only start a test phase with 300,000 smart meters in 2010 in two regions. Much like France, the
United Kingdom envisages smart grids as an upgrading of the current network rather than a tool for
a profound shift toward an efficiency+renewables economy. On the contrary, the UK Department of
Energy and Climate Change is even counting on a continuous increase in consumption.

36 ERGEG, “Position Paper on Smart Grids – An ERGEG Public Consultation Paper” (Brussels: 10 December
2009).
37 Ibid.
38 Technology Action Plan – Smart Grids, report by Italy and South Korea to the Major Economies Forum on
Energy and Climate (December 2009).
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“By 2050 we will need to produce more electricity than we do today but must do so largely without
emitting greenhouse gases. We will need to generate electricity from low‐carbon sources such as
renewables, nuclear and fossil fuel plants fitted with carbon capture and storage.”39
While significant knowledge gaps remain, there is overwhelming evidence that some of the systemic
effects of a nuclear‐power‐based electricity infrastructure include barriers to the development of an
efficiency+renewables‐based energy service society and, in some cases – especially as the level of
renewable energy increases – the fact that both approaches exclude each other.

39 http://www.decc.gov.uk/en/content/cms/what_we_do/uk_supply/network/smart_grid/smart_grid.aspx
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The Timing of Investment
Imperative of rapid climate change action
There is a growing, and now near universal, consensus that human‐induced greenhouse gas
emissions, particularly carbon dioxide (CO2) from the energy sector, are altering the global climate.
The Fourth Assessment Report from the Intergovernmental Panel on Climate Change stated that
“warming of the climate system is unequivocal” and that there was a more than 90% probability that
this was a result of human activities since the start of the industrial revolution. During the 20th
century, global temperatures increased by 0.6 degrees Celsius. Continuing along the current
trajectories of energy and land use will increase the concentrations of greenhouse gases in the
atmosphere to such a point that by the end of this century, temperatures might increase by an
additional 6 degrees. This would have catastrophic consequences for the human race and the earth’s
ecosystems.
To avoid the most dangerous consequences of climate change, the international community has set
a “2 degree target,” whereby emissions would be reduced to try and ensure that the global average
temperature does not increase by more than 2 degrees Celsius above pre‐industrial levels. This
target has been endorsed by a large number of international bodies and fora, including the
European Union, the International Panel on Climate Change and most recently the Copenhagen
Accord, which states: “We agree that deep cuts in global emissions are required according to
science, and as documented by the IPCC Fourth Assessment Report with a view to reduce global
emissions so as to hold the increase in global temperature below 2 degrees Celsius, and take action
to meet this objective consistent with science and on the basis of equity.”40
In order to meet this target, there must be a dramatic cut in greenhouse gas emissions of more than
80% by 2050. In many ways more important than the long‐term target are those for the short‐term.
Rapidly changing technology or behavior will demonstrate the viability of reducing emissions and
avoid locking in investment in high energy‐consuming/high emissions pathways. However, delays in
reducing emissions lead to much larger requirements for cuts in the future.
Lead times for scaling up new technologies, experiences and expectations
Nuclear power
Given the need for rapid emission reductions, the time needed to introduce new technologies on a
mass scale is an important and highly underestimated factor. There are two major phases for the
commissioning of new energy‐generating facilities: the pre‐development phase and construction.
The pre‐development phase can include a wide variety of consultations and potentially involves
obtaining the necessary construction and operating licenses, local and national consent, as well as
raising the financing package. In some cases, the deployment of a new technology may be sped up
as generic safety assessments are made, or alternatively, the pre‐development phase may take
longer due to local site conditions or new issues coming to light. The IEA has estimated a pre‐

40 Copenhagen Accord, drawn up at the UN Framework Convention on Climate Change, 15th Session
(Copenhagen: 7‐18 December 2009).
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development phase of approximately eight years for nuclear power.41 However, this includes the
time it takes to gain political approval and it assumes an existing industrial infrastructure, workforce
and regulatory regimes. In the case of the United Kingdom, then Prime Ministry Tony Blair
announced that nuclear power was “back with vengeance” in May 2006, but it was some years
before the pre‐development phase for nuclear power even began.
Nuclear power has a history of delays in construction, and analysis undertaken by the World Energy
Council42 has shown the global trend in increased construction times for nuclear reactors. The
significant increase in construction times from the late 1980s until 2000 was in part due to changes
in political and public views of nuclear energy following the Chernobyl accident, with subsequent
alterations in the regulatory requirements. As we have shown in the World Nuclear Industry Status
Report 2009,43 calculating a global average construction time – it would be around nine years for the
16 most recent grid connections – does not make much sense because of the differences between
countries. The construction period for four reactors started up in Romania, Russia and Ukraine lasted
between 18 and 24 years. In contrast, it took hardly more than five years on average to complete the
12 units that were connected to the grid in China, India, Japan and South Korea.
Increases in construction times can be seen in various countries across the world. In Germany, in the
period from 1965 to 1976, construction took 76 months, increasing to 110 months in the period
from 1983 to 1989. In Japan average construction time in the period from 1965 to 2004 was in the
range of 44 to 51 months, but from 1995 to 2000 the average was 61 months. Finally in Russia, the
average construction time from 1965 to 1976 was 57 months, then from 1977 to 1993 it was
between 72 and 89 months, but the four plants that have been completed since then have taken
around 180 months (15 years),44 due to increased opposition following the Chernobyl accident,
economic constraints and the political changes after 1992.
Table 1: Construction Time of Nuclear Power Plants Worldwide

Period of reference Number of reactors Average construction time (months)
1965‐1970 48 60
1971‐1976 112 66
1977‐1982 109 80
1983‐1988 151 98
1995‐2000 28 116
2001‐2005 18 82
2005‐2009 6 77
45
Sources: Clerici, 2006; IAEA.

41 IEA, Nuclear Power in the OECD (International Energy Agency, 2001).
42 World Energy Council, Alexandro Clerici, and ABB Italy, “European Regional Study Group – The Future Role
of Nuclear Energy in Europe” (13 June 2006); and, for post‐2000 figures, calculation based on PRIS database,
http://www.iaea.org/programmes/a2/index.html
43 Mycle Schneider et al., The World Nuclear Industry Status Report 2009.
44 World Energy Council et al., “European Regional Study Group” (2006).
45 Ibid. The 2005‐2009 range does not include the completion of the Cernavoda 2 unit in Romania, which took
279 months due to an extended break in construction.
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The first of the latest design of reactors, the so‐called Generation III+ reactors, is under construction
in Finland.46 At the time of the ordering of Olkiluoto‐3 in December 2003, the contract called for the
plant to be on‐line by 1 May 2009. However, the latest completion date is now at least three years
late and close to 100% over budget (current estimates suggest that by completion, the total will
reach €5.5 billion or more, compared to an original estimate of €3 billion). Given the complexities
and costs associated with construction, reactors tend to be built in series rather than parallel, i.e.,
constructors will wait until one reactor is completed until starting the next. Consequently, it will take
a number of additional years for a new fleet of reactors to be fully operational.
The construction of large numbers of reactors around the world would bring experience, which
would, under normal technological deployment conditions, lead to accelerated diffusion rates and
lower costs. To date, accelerated deployment rates have not occurred with nuclear power, in part
due to the complexity of the technology, the associated supply chains and the variety of the
technologies deployed. One of the cost and financing papers prepared for the Stern Review (the UK
government’s review of the economic impact of climate change) stated that:
The costs of energy production and use from all technologies have fallen systematically with
innovation and scale economies in manufacture and use, apart from nuclear power since the
1970s.47
This can be illustrated by the two largest nuclear programs in the world: the United States (figure 12)
and French ones (figure 13). Both show large increases in construction costs, despite considerable
construction experience. In the case of the United States, over the 25‐year period the cost per
installed kW increased approximately fivefold, while in France a fourfold cost was accrued. What is
also remarkable in France was that this was recorded for one company, as only the state‐owned
company was in a position to build and operate reactors.

46 For more information, see paper by Steve Thomas, “The Economics of Nuclear Power” (2010),
www.boell.de
47 Dennis Andersen, “Cost and Finance of Abating Carbon Emissions in the Energy Sector,” supporting paper
for the Stern Review (Imperial College London: October 2006), p. 18.
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Figure 12: Investment Cost Evolution (“Learning Curve”) of US Nuclear Power

Plants

48
Source: Cooper, 2009.
Figure 13: Investment Cost Evolution (“Learning Curve”) of French Nuclear

Power Plants

Source: Arnulf Grübler, 2009.49

48 Mark Cooper, The Economics of Nuclear Reactors: Renaissance Or Relapse? Mark Cooper is Senior Fellow
for Economic Analysis Institute for Energy and The Environment (Vermont Law School, June 2009).
49 Arnulf Grübler, An Assessment of the Costs of the French Nuclear PWR Program 1970–2000 (6 October
2009).
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Various reasons have been put forward for the relatively low or negative learning rate relating to the
manufacture of nuclear power plants, including the relatively small, post‐1970s reactor ordering
rate; the interface between the complexity of the nuclear power plant and the regulatory and
political processes; and the variety of designs deployed.50 While some of these factors may be
overcome in the future, the UK government’s Performance and Innovation Unit also highlighted a
number of areas in which future nuclear power plants may not exhibit comparable learning rates to
other technologies, including:
 Nuclear power is a relatively mature technology and, therefore, a dramatic “technological
stretch” is less likely than in other technologies;
 The relatively long lead times for construction and commissioning mean that improvements
derived by feeding back information from operating and design experiences on the first units
are necessarily slow;
 The scope for economies of scale is narrower in the nuclear case than for renewables, due to
the latter’s smaller initial scale and wider potential application (in types and numbers).
Furthermore, the industrial issue has radically changed since nuclear construction peaked around
1980. Many of the leading organizations in the nuclear industry in 1980 have moved away
completely from the nuclear business, having amalgamated with others in the nuclear field or
redirected their business approach to activities related to decommissioning and waste management,
where there has been an increase in activity in the last few years. This has resulted in a smaller
group of companies in fewer countries with the capability of managing the construction of a
complete nuclear power plant.51
The nuclear manufacturing industry is clearly in a state of profound reorganization and upgrading.
Investments in heavy‐equipment manufacturing capacity are very capital extensive. Manufacturers
will not go ahead with investments worth hundreds of millions of dollars if they do not have firm
orders for several years ahead.
Renewables
As figure 14 shows, the lack of a positive learning effect and the negative impact on the economics in
the nuclear sector have not proven to be applicable to renewable energy technologies. The further
diffusion of wind power, solar electricity and ethanol has in all cases led to a significant reduction in
installation or production costs.

50 Performance and Innovation Unit (PIU), “Energy Review Working Paper, The Economics of Nuclear Power”
(PIU, 2002).
51 IAEA, International Status and Prospects of Nuclear Power (2008).
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Figure 14: Technology Learning Curves
Source: IPCC Fourth Assessment Report, Report 3, Mitigation of Climate Change.
In 2002 the UK Government’s Performance and Innovation Unit estimated what the production costs
for various supply options in 2020 might be. This can be seen in table 2, where nuclear power costs
are significantly higher than onshore wind and offshore wind costs and are in a similar range to
energy crops and wave power.
Table 2: Electricity Fuel Source Cost Projections in 2020

Technology Cost in 2020 ‐ p/kWh Confidence in Estimate Cost Trends to 2050
Conventional Fuels
Coal (IGCC) 3.0‐3.5 Moderate Decrease
Gas (CCGT) 2.0‐2.3 High Limited decrease
CCS 3.0‐4.5 Moderate Uncertain
Large CHP (gas) Under 2 High Limited decrease
Micro CHP (gas) 2.5‐3.5 Moderate Sustained decrease
Nuclear 3.0‐4.0 Moderate Decrease
Renewables
Onshore wind 1.5‐2.5 High Limited decrease
Offshore wind 2.0‐3.0 Moderate Decrease
Energy crops 2.5‐4.0 Moderate Decrease
Wave 3‐6 Low Uncertain
Solar PV 10‐16 High Sustained decrease
Source: PIU, 2002.52
Recent years have seen an increase in opposition to wind power in some counties, which has led to
the cancellation and delays of projects. In the United Kingdom in 2009, only 25% of proposed
onshore wind power sites were given the local approval necessary – a fall from 63% in 2007. The
government’s Renewable Energy Strategy, published in July 2009, set a target of 14 GW of installed
capacity for onshore wind by 2020. Onshore in the United Kingdom, there are currently 3.2 GW

52 PIU, “The Energy Review: Performance and Innovation Unit,” The Cabinet Office (February 2002), p. 199.
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installed, 0.8 GW being built and 3.4 GW under construction – which makes 7.4 GW total, or just
over halfway to the target. However, there are another 7.4 GW in planning – enough to reach the
target in time if approved.53 Even larger offshore projects can be done quickly, relative to nuclear
power plants. In January 2010, the UK government announced plans for 32 GW, to complement the
8 GW currently under development. These are expected to be in operation by 2020.
It is important to note the differences in the construction of a wind farm compared to conventional
power stations. The European Wind Energy Association likens the construction of a wind farm to the
purchase of a fleet of trucks, as they noted that the turbines will be purchased at a fixed cost agreed
in advance and that a delivery schedule will be established. The electrical infrastructure can also be
specified well in advance. There may be some variable costs associated with the civil works, but this
cost variation will be very small compared to the cost of the project as a whole.54 The construction
time for onshore wind turbines is relatively quick, with smaller farms being completed in a few
months, most within a year. The wind industry has turned the speed advantage of implementation
into a major marketing tool.55

53 BWEA, Wind Farm Planning Approvals by Local Councils Slump to Record New Low of 25%, British Wind
Energy Association (20 October 2009).
54 EWEA, Wind Energy, The Facts: Volume 1, Technology, European Wind Energy Association (2003).
55 Vestas (2009): “You can get a Vestas wind power plant up and running in a year – much faster than
conventional energy plants – and this means a quick return on investment,”
http://www.vestas.com/en/modern‐energy/understanding‐modern‐energy/fast.aspx
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Opportunity Costs
Assessments by the International Energy Agency and others show two important and somewhat
conflicting trends. Firstly, that there will need to be unprecedented levels of investment in the
energy sector over the next decade. This is as a result of a number of trends:
 growing demand from developing countries, particularly in the urban environment ;
 the need to retire large numbers of electricity‐generating plants in OECD countries as they
reach the end of their operating lives and, in some cases, due to the introduction of
environmental protection legislation;
 depletion of existing energy reserves and the opening up of new energy reserves and
sources.
Secondly, however, there has been a reduction in investment in the energy sector over the last
couple of years due to: less availability and higher cost of capital, lower energy demand as a result of
the global recession and lower energy prices leading to higher levels of financial uncertainty. With
many analysts now predicting the end of the global recession, the conditions that slowed or halted
investment may be fully or partially removed. As a consequence, increased investment in the energy
sector is both likely and is being encouraged. However, despite the stated economic recovery,
capital will be limited, in particular for public sector investment. Furthermore, there will be
considerable competition for investment funds between sectors.
Assuming that there is an acceleration of investment in the energy sector, then decisions on what
types of investment are to be made now will determine the type of energy sector that will operate
for a generation. The figure below shows the scale of investment needed in the energy‐related
sector, according to the IEA, based on different scenarios. The IEA Reference Scenario assumes a
total level of investment of $25.6 trillion by 2030; whereas under conditions that keep greenhouse
gas emissions from raising global temperatures above 2 degree Celsius, the total investment would
be increased by an additional $10.5 trillion. Most of this investment will be needed to improve end‐
use efficiency, such as in buildings or vehicles, but there is also an increased cost associated with
fuel‐switching and electricity generated by non‐fossil fuels or carbon capture and storage (CCS).
However, this additional investment would lead to a lower demand for fossil fuels, reduce the level
of new investment required to extract and transport fossil fuels by around $2.1 trillion and reduce
the amount spent on fuel. The IEA predicts that fuels savings until 2030 would be in the order of
$8.6 trillion, and over the lifetime of the investment around $17 trillion.
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Figure 15: Changing Investment in Low-Carbon Energy Sectors

Source: IEA, World Energy Assessment, 2009.
This example shows the degree to which policy targets should influence investment. Failure to
recognize this will either lead to policy failure or stranded investments.
The same logic applies to investment choices for the power sector. Clearly, a much greater
penetration of end‐use energy efficiency will potentially reduce the need for further fossil fuel
exploration and exploitation as well as transmission investment. However, the most direct impact
will be between different electricity sources, as clearly an increase in investment in one reduces the
need for another.
Under virtually all global scenarios that result in an energy sector with considerably lower emissions,
nuclear’s contribution compared to renewable energy (aside from conservation and efficiency) is
relatively small. However, it is argued that nuclear power should nevertheless be included within a
wider portfolio of “low‐carbon energy options,” in particular along with CCS from coal or gas‐fired
power plants.
Changing the energy sector to one which is genuinely low‐carbon and sustainable will require
transformative change not only in the sources of energy, but also in the way that energy is
distributed and used. To enable this transition, changes in priorities and investments must be made
across the entire technology deployment chain, from research and development through to
widespread technological diffusion. The section below will look at each deployment stage and
compare nuclear power and renewable energy.
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Research and development
There are few areas in which there are such direct comparisons and competition between nuclear
power and renewable energy as in the field of government research and development. Despite
continued calls for increased R&D to address energy and climate security, in many countries the
level of government research expenditure is nearly half of what it was in the 1980s. This has affected
all energy sources and is an indication of both the desire for smaller government in general and the
greater role of the private sector in the energy field over the last decades.
Figure 16: National Research and Development Budgets in OECD Countries

(US$mil)

Source: IEA, 2010.56
This decline in budgets will decrease opportunities and limit the influence of governments in
developing new energy technologies. Figure 16 shows the dominance of nuclear power within these
R&D budgets, as it commands nearly two‐thirds of total expenditures over the past couple of
decades. This is a truly remarkable statistic and is a result of particular factors. Firstly, the nuclear
sector includes fission‐ and fusion funding, of which fusion currently receives the largest share of
R&D, as priority has been given to the development of the International Thermonuclear
Experimental Reactor (ITER) fusion project. Secondly, funding of nuclear power research – and in
particular the financing of demonstration or pilot facilities – is expensive and requires a
disproportionate level of funding, especially considering the lack of provided short‐term energy
service. The technical complexity and innovative nature of these demonstration facilities incur cost
overruns, and delays have and continue to occur. In the case of the ITER project in 2006, it was
expected to cost around €5 billion (US$7.4 billion) to construct and another €5 billion to operate
over a 20‐year period. But following an extensive design review, the construction costs are now

56 IEA, Research and Development Budget data‐base (2010), http://www.iea.org/stats/rd.asp
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expected to at least double.57 Such cost overruns are likely to impact upon the availability of
governments to fund other energy projects in the coming decades.
Figure 17: Technological Breakdown of OECD Energy Research and

Development Budgets (1974-2008)

Source: IEA, 2010.58
Investment costs
In competitive markets there are a number of factors that will affect the decisions on the types of
energy sources to be deployed. However, of particular importance is the cost of the energy
produced, the price at which it can be sold and the financial cost and risks of its development and
deployment.
Nuclear power is at a financial disadvantage when compared to most energy sources, as it has large
upfront costs, long construction times and – given the technological complexity – difficulty in
meeting anticipated budgets. The history of nuclear power is littered with examples of where the
cost expectations of nuclear construction have not been met, as can be seen in the following box.
Such cost overruns are important, not only because they significantly affect the cost of the particular
project, but because this will affect the cost of capital for further nuclear projects and/or for the
utility in general. As the IEA notes, “construction costs uncertainty is a major risk factor for
investors.”59

57 “Fusion Dreams Delayed International Partners are Likely to Scale Back the First Version of the ITER
Reactor,” Nature (27 May 2009): pp. 488‐489.
58 IEA, Research and Development Budget data‐base (2010).
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Box: Nuclear Cost Overruns
The construction costs of nuclear plants completed during the 1980s and early 1990s in the United States and
in most of Europe were very high — and much higher than predicted today by the few utilities now building
nuclear plants and by the nuclear industry generally.60
MIT 2003

[T]he evidence shows that, historically, cost estimates from the industry have been subject to massive
underestimates – inaccuracy of an astonishing kind consistently over a 40, 50 year period.61
Jonathan Porritt
Chair of the UK government’s Sustainable Development Commission
2005

I do not have any reason to believe ČEZ [the Czech utility constructing the Temelin nuclear power plant]. I have
been lied to nine times. I do not know why I should believe them in the 10th case.62
Vaclac Havel
then President of the Czech Republic
1999

Figure 12, taken from a report from the Vermont Law School, shows the extent of both the increased
costs of reactors construction in the United States in the 1970s and 80s and the rapidly changing
expectation of nuclear costs over the last few years. It is important to note that these cost increases
were not as a result of actual experience in the United States, as no reactors are currently under
construction, but presumably as a result of more in‐depth economic analysis and the impact of
experiences in other parts of the world.
Often these higher construction costs are not incorporated into the economic analysis that is used to
assess the costs of energy production.
For example, in its latest economic analysis, the IEA states that the overnight construction costs for
nuclear are in the range of $3,200 to $4,500 per kW.63 This is well below the summary of analysis
undertaken by academics from the Vermont Law School and others.64 On this basis, the IEA assumes
that production costs for electricity will be in the range of $55 to $80 per MWh.
Higher construction costs have a significant impact on the overall cost of nuclear electricity. The
University of Vermont study quotes three sources for the impact of higher construction cost on
electricity prices:

60 Massachusetts Institute of Technology, The Future of Nuclear Power (MIT, 2003).
61 Cited in House of Commons Trade and Industry Committee “New Nuclear? Examining the Issues,” Fourth
Report of Session 2005–06, Vol. I.
62 Office of the President, Press Department press release (12 May 1999).
64 See New Nuclear – The Economics Say No UK Green Lights New Nuclear – Or Does It? Citi Investment
Research & Analysis (November 2009).
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 The MIT model suggests that for every $1,000 of increased overnight costs, the busbar
costs65 go up by $US 1.8 cents/kWh in the utility finance model and 2.4 cents in the
merchant finance model;
 In the Harding study, busbar costs go up about 2.4 cents per kWh for every $1,000 increase
in overnight costs;
 In the University of Chicago study, the increase in busbar costs per $1,000 in overnight costs
was 3.0 cents per kWh.
Averaging these figures would give a $40/MWh increase if the electricity cost were a figure of $5,500
kW installed used, which falls in line with the higher end of the current expected utility cost
prediction and the lower forecast from Wall Street and independent analysts (see figure 12). This
would make the IEA’s average costs in the order of $95 to $120 per MWh.
Europe has also been experiencing higher than expected costs. The first order for a reactor at the
Olkiluoto plant in Finland had a price tag in 2004 of around $3,000/kW. After four years of
construction, although it should have been completed, it is still about four years from completion
and more than 75% over budget (close to $5,000/kW).66
Higher construction costs are likely to also reduce the ability of utilities or governments to invest in
other power plants or alternative energy management strategies. Currently, the IEA assumes that
the increased use of nuclear power will require 16% of the total investment. Assuming an
investment cost more in line with current US or European expectations will either lead to a reduced
investment of around 40% or a requirement of a similar increase in finances. Either option will
create potential difficulties for the power sector.
The figure below, from the UK government review in 2002, shows the carbon abatement costs of
different non‐fossil supply options and energy efficiency. Nuclear power was expected to be vastly
more expensive than all other energy efficiency measures and onshore and offshore wind; on a
similar range as energy crops; but possibly cheaper than marine energies.

65 The cost per kilowatt hour of producing electricity; it includes the cost of capital, debt service, operation
and maintenance, and fuel. The power plant bus, or busbar, is that point beyond the generator but prior to the
voltage transformation point in the plant switchyard.
66 Prof. Steve Thomas, “Blair's Nuclear Dream Faces Financial Meltdown,” Parliamentary Brief (7 January
2009).
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Figure 18: Estimated Carbon Abatement Costs in the UK in 2020 (£/tC)

Source: PIU, 2002.
Other, more recent analysis suggests that the costs of nuclear power and renewable energy may be
much closer to that suggested by the PIU. The most recent assessment from 2009, from the
consultancy McKinsey,67 assesses the abatement costs of a range of demand and supply
technologies and concludes that “several low‐carbon technologies have a similar abatement cost by
2030, this reflects the high level of uncertainty about which technologies are likely to prove to be
‘winners.’” The McKinsey analysis shows a range of nuclear and renewable technologies having a
carbon abatement costs as follows: new build: between €5 and 20/tCO2 equivalent; geothermal: 5
€/tCO2 e; nuclear: 10 €/tCO2 e; low‐penetration wind: 12 €/tCO2 e; concentrated solar power: 13
€/tCO2 e; high‐penetration wind: 20 €/tCO2 e.68 However, on nuclear power, the McKinsey analysis
uses €3,000 per kW in 2005 for developed countries ($2,000 per kW is used for developing
countries). This installed capacity cost‐estimate falls below current actual construction costs and
independent analysis.
Infrastructure and grids
Investment in electricity infrastructure will need to be accelerated in the coming decade, regardless
of the energy used for generation. The latest assessment by the IEA, in its 2009 World Energy
Outlook, concludes for its Reference Scenario that total investment needed by 2030 in the power
sector is $13.7 trillion, of which 48% will be needed for transmission and distribution ($2 trillion
transmission and $4.5 trillion for distribution). Investment costs for a system that produces less
carbon emissions will be higher.
The existing grid is largely based on the operation of large centralized power producers that use high
voltage cables to transport the power over long distances to urban or industrial areas, where lower
voltage wires take the electricity to the end consumer. These grids were built largely at a time when

67 Mckinsey, Pathway to a Low Carbon Economy – Version 2 of the Global Greenhouse Gas Carbon Abatement
Cost Curve (Mckinsey and Company, 2009).
68 Ibid., based on an estimation of exhibit 8.1.3 on page 63.
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the electricity sector was all under state ownership. Consequently, new power stations did not have
to pay for the grid connections that enabled them to operate. This potentially creates an additional
cost and economic disadvantage for new generating capacity entering the market at locations that
are not on the existing grid system, if they are required to pay for either grid reinforcement or
connections.
The current system is largely based on a “predict and supply” model, whereby the centralized
utilities attempt to ensure that the demand‐needs of the consumers are met at all times. However,
as has been noted in the previous systemic chapter, this system is inefficient and not fit for the
creation of a low‐carbon and sustainable energy sector. Furthermore, large‐scale changes will be
needed for the scope and functioning of the grid in order to accommodate renewable energy
production from a geographically wide and varying size‐set of generators. In some cases, for
example offshore wind, there can be no ambiguity about the need for the grid investment. Without
this investment in the grid, the development will not take place.
Such changes have been recognized both in policy statements and investment proposals, particularly
in the economic stimulus packages. However, in many cases the details are lacking and there
remains confusion over definitions and the extent to which a radical change is underway. In
particular, the use of the term “smart” has now become synonymous with change, but yet there is
no clear and universal understanding of what this means. One of the most striking examples of this
was a press release by the UK Department of Energy and Climate Change, just prior to the
Copenhagen conference. This statement, entitled “UK energy system gets smart,” used the word
“smart” 22 times in a 19‐sentence statement.69
The national stimulus packages produced as a result of the economic crisis highlighted both “green”
activities and the need for investment in “smart grids” in particular. According to analysis by the
London‐based bank HSBC, the total funding pledged for new grids globally was $92 billion, although
the majority of this, around $70 billion, was in China (out of total finances for Green activities of
$430 billion)70. However, it is clear that not all of the projects that are classified as “low‐carbon” or
“Green” differ significantly from existing maintenance or expansion plans.
The EU’s stimulus package for energy focuses on the European Energy Programme for Recovery,
which created the basis for providing substantial co‐financing from the Union budget to key energy
projects, through a €3.98 billion scheme that was said to be aimed at “protecting jobs and
purchasing power, boosting infrastructure and creating jobs in the low‐carbon sectors of the future.”
Investment in gas and electricity infrastructure projects received the largest share, €2.365 billion
(60% of budget), then CCS €1.05 billion (26% of budget) and finally offshore wind energy projects
€0.565 billion (14% of budget). Details about the CCS and offshore wind projects funded have been
made available, but not those of the gas and electricity infrastructure projects, which are still under
consideration. However, the projects under consideration do not appear to be related to low‐
carbon, particularly renewable energy, but re‐enforce the existing electricity market.71

69 http://www.decc.gov.uk/en/content/cms/news/pn139/pn139.aspx (16 March 2010).
70 HSBC, A Climate for Recovery; The Colour of Stimulus Goes Green (February 2009).
71 OJ, Regulation (EC) No 663/2009 of The European Parliament and of The Council of 13 July 2009
establishing a program to aid economic recovery by granting Community financial assistance to projects in the
field of energy L/200/31 (31 July 2009).
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Furthermore, only 10% of the criteria for judging the suitability of the projects relate to
environmental issues, and even here, there is no reference to “impact of the action inter alia on
nature, emissions, noise, land use and the measures to reduce or compensate any negative
impacts.”72 Under the offshore wind subcategory, three major grid infrastructure projects are to be
funded that will receive around €310 million for projects expected to cost in the order of €1.8 billion.
While the focus remains on heavy investment in high‐tension power transport infrastructure, a
thorough, systemic analysis about conflicting investment dynamics is overdue. The absolute priority
given to the ever growing high‐power – and high‐loss – centralized transport and distribution
systems constitute an effective barrier for the speedy introduction of highly efficient, decentralized
smart grids that minimize transmission losses and constitute a key ingredient of future intelligent
networks that profoundly redefine the roles of the electricity producer/user.
An electric car, for example, transforms electricity much more efficiently into mechanical power
than the combustion engine. However, this physical reality remains pure theory unless the electricity
is generated in a sustainable way. It is crucial to reorient the infrastructure investments toward an
entirely different systemic approach rather than to continue to patch up the old, inefficient
infrastructure with new devices that will not make the overall system performance any better.

In recent years, the capacity difficulties of integrating larger quantities of intermittent renewable
energy into the grid has already been seen in a handful of cases. These problems were exacerbated
by large and unwieldy nuclear power plants, which require permanent access to the grid. The growth
of renewable energy in recent years has shown that projects are being constructed on time and
within budget and connecting to the grid has not been a problem. Furthermore, it clearly makes
sense to give priority access to renewable energy, as they use no fuel. Unless there is systematic
change, then the inefficient use of renewables will increase. Therefore, there must be a fundamental
reform of the management of grids with significant investment for new infrastructure and product
development. This must be based on higher levels of supply efficiency that prioritizes the localized
production and use of energy, supplies responsive consumption and storage, integrates regional
electricity grids to reduce the need for backup generation and, where necessary, exploits larger
renewable resources such as offshore wind.
Market mechanisms
Over the last decades, the global trend to greater market liberalization has resulted in less state
intervention in the operation of the gas and electricity markets. However, this has not led to a total
“hands off” approach to energy supply, but rather the introduction of more market‐based
mechanisms to support particularly technologies.
These market mechanisms have been most recently and effectively used – in some, but not all cases
– to help establish renewable energy. In particularly, within the electricity market, mechanisms such
as feed‐in tariffs and guarantees on market share, have been introduced. By early 2009, policy
targets for renewable energy existed in at least 73 countries. This includes state/provincial‐ level

72 European Commission, Information Day (2009),
http://ec.europa.eu/energy/grants/docs/eepr/eepr_info_day_presentation_interconnections.pdf
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targets in the United States and Canada, which have no national targets.73 These policy mechanisms
are the foundation of the success of renewable energy.
Importantly, it has been stated and legally tested in Europe that these mechanisms do not constitute
state aid. Specifically, in a test‐case judgment delivered in 2001, the European Court of Justice stated
clearly that well‐structured feed‐in tariffs did not represent state aid, but are justified as a means to
balance out the external costs that are not factored into pricing. This ruling has been expanded upon
by the European Commission, which states that from an economic‐efficiency perspective, a number
of market failures justify state intervention in renewable electricity markets.74 The reasons given for
this were as follows.
 “Since complete internalisation of […] externals does not appear politically feasible at
present in most countries […] supporting renewables to take account of their lower
emissions profile can be justified on efficiency grounds.”
 “Although some renewables, such as wind in prime locations, exhibit cost structures close to
those of conventional sources, renewables are generally considered to be not yet
commercially competitive on an unprotected electricity market, especially as this market is
still distorted by a large number of direct and indirect subsidies for the existing electricity
system, and is based on infrastructure that was mainly built when the electricity sector was
publicly owned […] Despite the long‐term prospects of renewables, the market is still under‐
investing in research and development, which is why governments should provide incentives
to innovate.”
 “Regulatory systems nowadays favour conventional energies, which have additionally
profited from massive government support for R&D in the past.”

US Nuclear Subsidies Compared

In their first 15 years, nuclear and wind technology produced a

comparable amount of energy (nuclear: 2.6 billion kWh; wind: 1.9
billion kWh), but the subsidy to nuclear outweighed that of wind
by a factor of over 40 ($39.4 billion to $900 million).

Marshall Goldberg, “Federal Energy Subsidies: Not All Technologies Are
Created Equal,” REPP no. 11 (July 2000)

The lack of orders for new nuclear power in most liberalized markets has resulted in fewer
technology support mechanisms actually being used, although there is increased financing being
made available or earmarked. The clearest example is in the United States, in which the 2005 Energy
Act made clear its financial support for nuclear power, including:

73 REN 21, Renewables Global Status Report 2009 Update: Renewable Energy Policy Network for the 21st
Century (2009).
74 European Commission, Communication from the Commission: The Support of Electricity from Renewable
Energy Sources, SEC(2005) 1571, Com(2005)627 final, (2005).
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 production tax credits: 1.8 cent tax credit for each kWh from new reactors for eight years for
six reactors – cost to US treasury: $5.7 billion;
 loan guarantees for first 6 to 8 reactors (worth up to $18.5 billion);
 a support framework against regulatory or judicial delays, worth up to $500 million for the
first two reactors and $250 million for the next four;
 further research and development funding worth $850 million;
 assistance with historic decommissioning costs (up to $1.3 billion).

In December 2007, Christopher Crane, president of Exelon Generation, one of the utilities that has
stated an intention to build new nuclear plants, said: “If the loan guarantee program is not in place
by 2009, we will not go forward.”75 The importance of this particular market mechanism was made
clear in January 2010, when President Obama trebled the potential financing available, ensuring that
up to $54 billion would be made available under his proposed energy bill.
As noted, in other countries with liberalized electricity markets, there are currently fewer overt
market mechanisms purely for nuclear power. However, broader support mechanisms are being
developed that could enable the further financial support for nuclear power. At the informal Summit
at Hampton Court in October 2005, during the term of British Prime Minister Tony Blair, Dieter Helm
put forward an informal paper, “European Energy Policy, Securing Supplies and Meeting the
Challenge of Climate Change.”76 This paper suggested that the need for investment – due to the
retiring of much of the current generating capacity – was an ideal opportunity to invest in “non‐
carbon energy sources.” Furthermore, the paper stated “the EU should consider widening the
definition of renewables towards a definition that includes a number of emissions reductions
technologies.”
In some cases, more explicit attempts have been made to reclassify nuclear power as a renewable
energy source. In the US state of Arizona, language in legislation on the renewable energy bill was
defeated in February 2010 – it had proposed to include nuclear power within the definition of
renewable energy. This would have enabled nuclear to be included in the target that required
utilities source to acquire 15% of their electricity from renewable sources. Arizona Governor Jan
Brewer issued a statement when the nuclear elements were withdrawn from the bill: "This sends a
clear and united message to employers around the world — Arizona remains the premier
destination for solar industries.”77
The European Commission released on 8 March 2006 the Green Paper, “A European Strategy for
Sustainable, Competitive and Sustainable Energy.”78 It included the following section on low‐carbon
technologies:
Furthermore, it might be appropriate to agree an overall strategic objective, balancing the
goals of sustainable energy use, competitiveness and security of supply. They would need to
be developed on the basis of a thorough impact assessment and provide a benchmark on

75 “Loan Guarantees Tagged as Key for Nuclear Builds,” Power, Finance and Risk (21 December 2007).
76 http://www.fco.gov.uk/Files/kfile/PN%20papers_%20energy.pdf
77 “Bill to Classify Nuclear as Renewable Energy Killed,” Phoenix Business Journal (22 February 2010),
http://phoenix.bizjournals.com/phoenix/stories/2010/02/22/daily51.html
78 http://europa.eu.int/comm/energy/green‐paper‐energy/index_en.htm
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the basis of which the EU’s developing energy mix could be judged and would help the EU to
stem the increasing dependence on imports. For example, an objective might be to aim for a
minimum level of the overall EU energy mix originating from secure and low‐carbon energy
sources. Such a benchmark would reflect the potential risks of import dependency, identify
an overall aspiration for the long term development of low‐carbon energy sources and
permit the identification of the essentially internal measures necessary to achieve these
goals.
Such measures are now being proposed in Europe and in February 2010, the UK energy regulator –
OFGEM – announced that “there is an increasing consensus that leaving the present system of
market arrangements and other incentives unchanged is not an option” for security of supply and
environmental reasons.79 One of the measures that OFGEM was considering was capacity tenders
for all forms of generation, including renewables and nuclear power, to provide clearer long‐term
investment signals.
The use of market mechanisms for the wider deployment of renewable energy has been legally
justified, in Europe, as they seek to balance the existing environmental and economic distortions
that exist in the market. Furthermore, they facilitate the development of new technology that has
not benefited either from the historically much larger research and development budgets or from
the construction of infrastructure that occurred when the system was state owned. These same
justifications cannot apply to nuclear power as the technology has, and continues to, receive the
largest share of research and development; has been favored by the implementation of
infrastructure; and is not responsible for the full cost of its actual and potential environmental cost.
However, as noted, measures are now being introduced in the United States to financially support
the introduction of nuclear power once again, while in Europe attempts are being made to move
away from specific targets for the introduction of renewable energy and to create a “low‐carbon”
target. These measures will potentially dilute the effectiveness of renewable policies and, more
importantly, raise doubts in the minds of investors about the seriousness of the commitment by
governments to renewable energy.
This section has looked at the opportunity costs of nuclear power and renewable energy. However,
there are many other issues that a detailed comparison would address. One study by Mark Jacobson
published in the journal Energy and Environmental Science80 looked at a range of energy sources and
their potential to address climate change, air pollution and energy security, while considering a
range of other issues, such as water supply, land use, wildlife, resource availability, thermal
pollution, water pollution, nuclear proliferation and malnutrition. The conclusions of Professor
Jacobson’s research is shown in the table below and shows that nuclear power is ranked below all
other renewable energy options that are used for generating electricity. The technologies
considered were solar PV, concentrated solar power, wind, geothermal, hydroelectric, wave, tidal,
nuclear and coal with CCS, along with biofuels, corn and cellulosic.

79 OFGEM, “Action Needed to Ensure Britain’s Energy Supplies Remain Secure,” press release (4 February
2010).
80 Mark Z. Jacobson, “Review of Solutions to Global Warming, Air Pollution and Energy Security,” Energy and
Environmental Science (1 December 2008).
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Table 3: Ranking of Renewable, Nuclear and Coal Technologies
Weight
(BEV)
Wind
(HFCV)
Wind
Solar PV
CSP
al
Geotherm
Hydro
Wave
Tidal
Nuclear
CCS
Corn
Cellulosic
Resources 10 2 3 1 4 7 10 6 5 9 8 11 12
CO2 emis. 22 1 3 5 2 4 8 7 6 9 10 11 12
Mortality 22 1 3 5 2 4 8 7 6 10 9 11 12
Footprint 12 1 2 8 9 5 10 4 3 6 7 11 12
Spacing 3 8 9 5 6 2 10 7 1 4 3 11 12
Water 10 1 6 5 9 4 11 1 1 7 7 12 10
Thermal 1 1 2 4 8 3 7 6 5 12 11 10 9
Water 3 1 3 5 2 4 8 7 6 10 9 12 11
poll
Energy 3 3 4 2 6 7 11 5 1 12 8 9 9
supply
disrupt
Operating 8 10 1 10 5 6 2 10 9 7 8 3 3
reliability
Weighting 2.09 3.22 5.26 4.28 4.60 8.40 6.11 4.97 8.50 8.47 10.6 10.7
Overall 1 2 6 3 4 8 7 5 9= 9= 11 12
rank
Source: Jacobson, 2009.81
The impact of nuclear energy policy on climate change and the environment has been assessed in
more depth in an article by Felix Matthes.82

81 Ibid., table 4.
82 http://www.boell.de/downloads/ecology/NIP6_MatthesEndf.pdf
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Conclusions

Nuclear power has already been and continues to be the recipient of large government
interventions. As one example notes, in their first 15 years, nuclear and wind technologies produced
comparable amount of energy in the United States (nuclear: 2.6 billion kWh; wind: 1.9 billion kWh),
but the subsidy to nuclear outweighed that to wind by a factor of over 40 ($39.4 billion to $900
million). Even today, with the demise of new orders for nuclear power and the rise of other
technologies, nuclear power continues to enjoy unparalleled access to government research and
development funding.
Furthermore, it continues to receive large, indirect subsidies83 through the lack of inclusion of
environmental costs into the electricity prices, particularly through government guarantees for the
final storage or disposal of radioactive waste. More direct financial assistance is made available
through the limitations and government financial guarantees for third‐party liability insurance,
though export credit agency guarantees, production tax credits or loan guarantees.
Global experience of nuclear construction shows a tendency of cost overruns and delays. The history
of the world’s two largest construction programs, that of the United States and France, shows a five‐
and threefold increase in construction costs respectively. This cannot be put down to first of a kind
costs or teething problems, but systemic problems associated with such large, political and
complicated projects. Recent experience, in Olkiluoto in Finland and the Flamanville project in
France, highlight the fact that this remains a problem. The increased costs and delays with nuclear
construction not only absorb greater and greater amounts of investment, but the delays increase the
emissions from the sector.
From a systemic point of view the nuclear and energy efficiency+renewable energy approaches
clearly mutually exclude each other, not only in investment terms. This is becoming increasingly
transparent in countries or regions where renewable energy is taking a large share of electricity
generation, i.e., in Germany and Spain. The main reasons are as follows.
 Competition for limited investment funds. A euro, dollar or yuan can only be spent once
and it should be spent for the options that provide the largest emission reductions the
fastest. Nuclear power is not only one of the most expensive but also the slowest option.
 Overcapacity kills efficiency incentives. Centralized, large, power‐generation units tend to
lead to structural overcapacities. Overcapacities leave no room for efficiency.
 Flexible complementary capacity needed. Increasing levels of renewable electricity sources
will need flexible, medium‐load complementary facilities and not inflexible, large, baseload
power plants.
 Future grids go both ways. Smart metering and smart grids are on their way. The logic is an
entirely redesigned system where the user gets also a generation and storage function. This
is radically different from the top‐down centralized approach.

83 For a more in‐depth discussion of historic government subsidies to nuclear energy in Germany, see Green
Budget Germany (2009) “Staatliche Förderungen der Atomenergie im Zeitraum 1950 bis 2008.”
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For future planning purposes, in particular for developing countries, it is crucial that the
contradictory systemic characteristics of the nuclear versus the energy efficiency+renewable energy
strategies are clearly identified. There are numerous system effects that have so far been
insufficiently documented or even understood. Future research and analysis in this area is urgently
needed.
This is particularly important at the current time because the next decade will be vital in determining
the sustainability, security and financial viability of the energy sector for at least a generation. Three
key policy drivers and considerations have come together that must transform the way in which
energy services are provided and energy carriers (electricity, hydrogen…) and fuels are generated,
transported and used. These are:
• the growing awareness of the need for action to reduce the threats of dangerous climate
change and the realization of the important contribution of the energy sector;
• increased and expected further increases in global competition for traditional energy
resources, with this increased demand not being matched by new discoveries of larger
resource reserves;
• and a need for accelerated investment in the energy sector, in OECD countries, as a result
of the obsolescence of existing infrastructure, and in developing countries as a result of
accelerated urbanization and demand for different and amplified energy services.
As has been noted by the OECD’s International Energy Agency and others, business as usual is not an
option. Renewable energy has been a, if not the, major industrial success story of the last decade. In
2009 in Europe, €13 billion of wind investment was made, which led to wind power plants
accounting for 39% of new power production installations – the second year running that more wind
power was installed than any other generating technology. Furthermore, renewable power
installations in general accounted for 61% of new EU grid connections in 2009. The EU power sector
continues its move away from coal, fuel oil and nuclear, each technology continuing to
decommission more than it installs. While it is clear that some countries are more successful in their
renewable energy deployment, there is a global attempt to increase the use of the technology with
policy targets for renewable energy existing in at least 73 countries. Importantly, many developing
countries are at the forefront of the manufacturing and use of renewable energy. China already
leads the world in the use of solar thermal and is expected to become the largest manufacturer of
wind turbines shortly and, in 2009, was responsible for the largest increase in installed wind
capacity. Furthermore, the use of renewable energy in Europe is expected to treble in the coming
decade and significantly increase in most OECD countries.
The use of renewable energy has shown that it is a key set of technologies for reducing greenhouse
gas emissions from the power sector. However, to date, its role for other sectors, in particular for
transport and heat and cooling, has yet to be fully recognized. Consequently, its contribution to the
energy mix is considerably less than for electricity in many countries, when not considering
traditional and non‐commercial energy sources.
It is crucial, however, to realize that renewable energy policies will not achieve the indispensable
emission reduction results without a massive effort in energy efficiency throughout all energy
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systems. Germany’s power sector is a striking example, as consumption increased faster than the
decarbonization of the kWh, wiping out most of the beneficial effects of the highly successful
renewable energy program. This starts with the appropriate layout for long‐term infrastructure
investments, in particular in urban planning, building design and land use. We cannot afford to
continue creating additional artificial transport needs because we build office buildings and shopping
malls where there are no homes. We have neither the time nor the resources to waste by investing
in inefficient buildings first and (maybe) retrofit after.
Confidence in the longevity and effectiveness of government policies are vital if private finance is to
be attracted to the energy efficiency+renewable energy sector. “Investment grade”84 renewable
energy policies must remain in place and be extended into the long term. Ideally, these policies and
targets should spell out the opportunities and objectives for each renewable energy sector,
reflecting the status of the market and each technology, to ensure that adequate, but not excessive,
support is made available. However, the relatively low contribution of non‐hydro renewable energy
to the global electricity supply demonstrates both the potential market that exists and the scale of
investment that will be needed on the short‐ and long term. Therefore long‐term, clear signals must
be introduced that demonstrate the commitments by governments to this sector. Sending mixed
signals with proposals to blend renewable energy targets with “low‐carbon” objectives will create
uncertainty and undoubtedly delay or halt investment.

84 See Kirsty Hamilton, Unlocking Finance for Clean Energy: The Need for “Investment Grade” Policy; Hamilton
is Research Fellow at the Chatham House, http://www.chathamhouse.org.uk/files/
15510_bp1209cleanenergy.pdf (15 March 2010).
45 | P a g e

Systems for Change

Antony Froggatt is a Senior Research Fellow at Chatham House, where he specializes in issues
relating to climate change, EU energy policy and nuclear power. For over 20 years he has worked
extensively on EU energy policy for NGOs and think tanks and as a consultant to European
governments, the European Commission and Parliament and commercial bodies. At Chatham House
he has co‐authored reports on the synergies and conflicts between energy and climate security
policies and low‐carbon development in China.
Mycle Schneider works as an independent international consultant on energy and nuclear policy.
Between 1983 and April 2003, Mycle Schneider was executive director of the energy information
service WISE‐Paris and chief editor of the web‐based Plutonium Investigation. Since 2000 he has
been an advisor to the German Environment Ministry. Since 2004 he has also been in charge of the
Environment and Energy Strategies Lecture of the International Master of Science for Project
Management for Environmental and Energy Engineering at the French Ecole des Mines in Nantes,
France. In 2006/2007 he was part of a consultants’ consortium that assessed nuclear
decommissioning and waste‐management funding issues on behalf of the European Commission.
Mycle Schneider has provided information and consulting services to a large variety of clients,
including the International Atomic Energy Agency (IAEA), Greenpeace International, UNESCO, World
Wide Fund for Nature (WWF), the European Commission, the European Parliament’s General
Directorate for Research, and the French Institute for Radiation Protection and Nuclear Safety
(IRSN). In 1997 he was honored with the Right Livelihood Award (“Alternative Nobel Prize”) together
with Jinzaburo Takagi for their joint work on plutonium issues.
46 | P a g e

Systems For Change: Nuclear Power vs. Energy Efficiency + Renewables?

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Systems For Change: Nuclear Power vs. Energy Efficiency + Renewables?

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Systems for Change:

Nuclear Power vs. Energy

By Antony Froggatt with Mycle Schneider

Paper prepared for the Heinrich Böll Foundation, March 2010

Heinrich-Böll-Stiftung Schumannstraße 8 10117 Berlin

Figure 1: Growth in Global Energy Demand

Figure 2: Global Growth of Renewable Energy in the Power Sector

Figure 3: New Financial Investment in Clean Energy by Sector: 2004-2009

Other low carbon tech/services

Marine & small hydro

$38bn Biomass & Waste

2004 2005 2006 2007 2008 2009

Figure 4: Global Electricity and Hydropower Production (TWh)

Figure 5: Accumulative Global Wind Power Capacity (MW)

Figure 6: Installed Capacity of Wind Power Plants in 2008 (MW)

Figure 7: World Installed Concentrating Solar Thermal Power Capacity

Figure 8: World Annual Solar Cell Production 1975-2007 (MW)

Figure 9: World Nuclear Reactors and Capacity 1954-2010 (GW)

Figure 11: Electricity Production from Non-Fossil Fuel Sources

Table 1: Construction Time of Nuclear Power Plants Worldwide

Figure 12: Investment Cost Evolution (“Learning Curve”) of US Nuclear Power

Figure 13: Investment Cost Evolution (“Learning Curve”) of French Nuclear

Figure 14: Technology Learning Curves

Table 2: Electricity Fuel Source Cost Projections in 2020

Figure 15: Changing Investment in Low-Carbon Energy Sectors

Figure 16: National Research and Development Budgets in OECD Countries

Figure 17: Technological Breakdown of OECD Energy Research and

Figure 18: Estimated Carbon Abatement Costs in the UK in 2020 (£/tC)

Table 3: Ranking of Renewable, Nuclear and Coal Technologies

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